Top-down analysis is a trading strategy that involves analyzing the market from higher time frames to lower time frames to identify the overall trend, key levels, and optimal entry points, leading to more precise trades with tighter stop-losses and maximized profits.
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so this was a trade that I took last
night and you can see it was a very
beautiful entry so in order to get the
best entry when you are trading you need
to make use of multiple time frames and
in this full lesson I will teach you
everything you need to know about Top
Down analysis so this is what you will
learn in this video what is topown
analysis why look at multiple time
frames instead of just one how to trade
using multiple time frames and I'm also
going to show you my own personal High
win rate topown analysis strategy at the
end of this video If You Can Master top
down analysis you can get this sniper
entries where you have like the tighest
stop- loss and you can maximize your
profits and make the most amount of
money out of your trade now firstly what
is stop down analysis A lot of people
always ask me what are the best time
frames to trade the truth is there is no
one single best time frame to trade it
all depends on the context that is why
you need to make use of multiple time
frames and top down analysis is help you
do just that it's basically analyzing
the charts from higher time frames and
then narrowing down to the smaller time
frames firstly we look at the overall
big picture of the market and then we go
down to the smaller time frames look for
our entry that is what topown analysis
is so the next question you might have
is why look at multiple time frames
instead of only one on the left hand
side we got gu on the 4our time frame
and you can see that price has
approached this major Supply area right
here which means that's going to sellers
at this area waiting to shut the price
down and push the price down over here
price gave us a Evening Star Candlestick
pattern which tell us that price is
about to reverse right now and how we
can enter for this trade is by going
down to the 15minute time frame which we
have on the right side over here if you
go down to the 15minute time frame you
get a better entry and you can also see
that price is creating a double top
right here so when price is creating a
double top you can expect liquidity to
be at this second top generating over
here so that is when we can enter for
our short position right here place our
stop loss above this stop right here and
take profit at the next key level or the
next demand Zone and we can't trade with
only just one time frame we need to use
multiple time frames so that we can
analyze our charts and also look for our
entry and if you still don't understand
the importance of top down analysis let
me give you three more reasons the first
reason is that you want to gain a
clearer picture of the overall trend
Direction so in this case we are on the
50 minute time frame and you can see
price is in the downtrend right so you
should be looking for sell right wrong
because if you go up to the higher time
frame the 4our time frame or even the
daily time frame you will see that price
is actually in an uptrend right the
overall trend is a uptrend the higher
time frame is showing us a bullish Trend
Direction which means that price is
going up and we should be only looking
for buy opportunities if we want to
trade with the trend and this is why it
is so important to make sure that you
also look at at higher time frame
because you will never know when you're
going to be wiped out by the overall
higher time frame Trend if you are only
focusing on the smaller time frame like
the 15-minute time frame for example
let's say you're on a 15-minute time
frame and you ENT up for a sale because
you saw that price was in a downtrend
and then you will never ever know when
this overall uptrend is going to come
inside the market and push the price up
and you're going to get stopped out for
your short trade right here so make sure
you take note of this the second reason
is that you want to get the optimal
entry Point as Traders our job is to
look for the price where we can get in
for the best entry so that we can
minimize our loss and maximize our
profits and you can do that by going
down to the smaller time frame to look
for your entry just compare these two
entry right here so on the left hand
side we entered for this trade on the
4-Hour time frame and there was a 48
Pips stop- loss over here and then on
the right hand side we ENT up on a
15-minute time frame and same thing we
place our stop loss based on Market
structure and in this case that's only a
11 pip stop- loss and if you compare
these two trades the risk to reward
ratio you can see this trade will have a
much more higher risk to reward ratio
compared to this trade over here and the
reason is because we had a battle entry
and that is why you guys also need to
make use of the smaller time frames to
look for a better entry point so they
can really have like those tight stop
loss like this 10 pip stop loss the
third reason is actually because we want
to check our blind spots so we assume
that there is a supply Zone area right
here so we enter up for a short trade at
this Supply Zone and we place our stop
loss Above This Supply Zone and place
our take profit all the way at the next
demand Zone which could be somewhere
right around here right if you look at
what price is doing right here this is
the major demand Zone but there is one
mistake right here because you actually
neglected your blind spot if you zoom in
at this area and you are just trading
based on what you see right here right
obviously the next take profit area is
right here but if you actually like zoom
out a little bit you will actually see
that there is another demand Zone that
is at this area right here so that is
what I mean by blind spot and you can
see price went down to this demand areel
here first and then mitigated it and
actually went back up so in reality your
take profit equ is it been right here
instead of right here now if you don't
check your blind spots by looking
towards the left for any unexpected key
zones this is why a lot of time you
won't hit your take profit and you won't
exit the trade with a good profit so
make sure you check your blind spot now
let's talk about how to trade using
multiple time frames so for the higher
time frames you're going to use it to
look for the trend direction right this
is your directional time frame to see
the overall trend direction of the
market whether it's bullish or bearish
and then for the lower time frames
you're going to use it to analyze the
charts mark up your charts so that you
can determine the best entry points and
then for the micro time frames the
smaller smaller time frames you're going
to use it to look for your entry
confirmation for you to enter for the TR
trade now combining all of these
together you will get your top down
analysis top down analysis is basically
where you go down from the higher time
frames to the lower time frames and then
go down even to the micro time frames to
look for your entry but you first
started analyzing the charts on the
higher time frames so the higher time
frames are mainly the weekly and the
daily time frame and you're going to use
it to identify the trend Direction and
find any major key levels and also
identify the recent price daily high and
low so over here you can see this is on
the weekly time frame right we are
analyzing the charts and we are looking
for the overall trend Direction on the
higher time frame so right here you can
see price is obviously creating a
downtrend that is why we should be
looking for selling opportunities and at
the same time you can also Mark up your
major key levels on the weekly time
frame and you can see these two levels
are very very strong levels that price
would definitely respect if Price ever
encountered that level and then if you
go down to the Daily time frame you can
even mark up your prior day high and
your prior day low and price will tend
to respect these two levels here after
we got our overall trend Direction on
the higher time frames we will go down
next to the lower time frames to analyze
the charts even further so the lower
time frames are the 4 Hour and the 1
hour time frame and this is where you
scan for trading
opportunities and you mark up your
charts with supply and demand zones all
the blocks identify the market structure
higher high and higher low in uptrend
lower high and a lower low in a
downtrend and whether you look for any
break of structure and then you mark up
your Fibonacci and also your trend lines
Etc whatever TOS you have in your
Arsenal to help you mark up the charts
this is where you do it so once again we
narrowed down to the 4-Hour time frame
and we marked up our demand Zone at this
area here because there was a lot of
buying pressure at this area so this is
definitely a demand Zone where the big
Banks the smart money they are looking
to enter for buy in bulk like buy orders
in bulk and then this is your supply
Zone area over here so we can expect
price to mitigate this Supply Zone and
go down when price approach this area
here and also we can identify the market
structure like what I did over here you
can see this is the lower highs lower
lows lower highs uh lower lows lower
highs and another lower low so we can
see clear as day price is in the
downtrend in addition to all that like I
said you want to make sure that you use
all the tools in Your Arsenal to help
you mark up your charts so that you can
determine where to enter for the trade
and where to get out of the trade so
this is when you can also make use of
the Fibonacci retracement tool and mark
up like the retracement levels so to see
where price is going to retrace to and
where price is going to go next after
it's done retracing and you can also use
your trend lines to see the overall
trend Direction and look for liquidity
at these trend line bounce areas at this
point of time you have gain an overall
perspective of the trend Direction on
the higher time frames and you have also
analyze the charts on the lower time
frames mark up your charts and now
you're looking for your optimal entry
point so this is where you go down to
the micro time frames 15 minute and 5
minute time frame I will advise the 15-
minute time frame from intraday Traders
or even swing Traders and then for the 5
minute time frame is mostly for scalpers
who are getting in and out of the market
fast like within 30 minutes or within 1
hour so this is where you look for
confirmation for your entry and this is
where you observe like really really
observe the Japanese candlesticks to
tell us what is price doing is liquidity
entering the market is that confirmation
for us to enter for the trade in this
case we enter for the short position on
a 50 minute time frame at a supply Zone
area that we have right here and we also
entered when we saw some sort of
confirmation that price was giving us
selling liquidity AA right here you can
see this Candlestick right here and also
a trend line bounce right price bounc
off this trend line as well and it was
also a Fibonacci 61.8 retracement level
so we got all the Confluence for us to
enter for the short position and take it
all the way down to the next demand zone
right here now knowledge is absolutely
useless if you do not apply it so let's
apply it together I'm going to go onto
the charts right now and show you my
entire high wind rate top down analysis
strategy right now so like I said the
first thing you want to do is to go to
the weekly time frame this is where we
are gaining the overall trend direction
right the overall trend Direction and
marking up any major key levels that we
have so I can see there's a major key
level right here there's a major
resistance level right here there's
another major key level right here but
the thing about marking these key levels
on the weekly time frame is that some of
them are irrelevant we want to focus on
what price is doing currently the key
levels around price currently not the
key levels that is from freaking one
year ago so we can remove this and just
go down to the Daily time frame so if
you look at the daily time frame you can
see that price is actually in a uptrend
right now right price is creating higher
highs higher lows higher highs and
higher lows higher highs and higher lows
but at this point of time there could be
a shift in Market structure right price
could be reversing towards a downtrend
right now and in order to confirm that
we want to go down to the 4our time
frame to look for our Market structure
to observe Market structure remember so
we go down to the 4-Hour time frame and
we just remove this area because we can
actually mark up a supply Zone that is
at around this area here yeah around
this area here there's a supply zone so
let me change this to supply and then
there's another Supply Zone at this area
right here yep and then there is also a
demand Zone that is at this area right
here around this area right here that
you can mark up your demand Zone at this
point of time we have marked up our
supply and demand Zone but before we do
that we actually want to make sure that
we look at the market structure first so
let me just make it clearer for you guys
and as you can see clear as day price
was in the uptrend right price was
creating higher highs higher lows and
then another higher highs higher lows
and another higher high right here but
if If You observe what price is doing
right now price has approached this
major key level that we have drawn on
the weekly time frame right and also
there is no higher high being created
right what I mean by that is that there
is no higher high that is going to be
created right here right this high is
the same level at this high so that's
the first sign that tell us that
liquidity is about to go away and the
sellers is about to come inside this
market and take over the market and that
is exactly what happened right here
price actually managed to reverse at
this very strong Supply zone right here
this weekly key level and actually
revers to becoming a downtrend and is
creating lower highs lower lows lower
highs and lower lows right now so at
this point of time we should only be
looking for sell opportunities because
we have analyzed the market structure
and it show us that price is actually in
a downtrend at this point of time so
that is where we can move on to the next
step is to mark up our supply and demand
zones the more recent ones these are the
major key levels that was was like a
month ago so you want to mark up the
more recent one and in order to mark up
your supply and demand Zone you want to
look for areas of inefficiency so what
is inefficiency is basically these large
candlesticks right here you can see this
large candlesticks where price mov very
far away from the origin point and there
is a lot of liquidity a lot of momentum
right here so after you have identified
the inefficiency basically the supply
zone or the auto block a will be the
candle before this inefficiency so This
is the in efficiency and then this is
the candle before it so you want to Mark
the high of the candle the highest point
to the lowest point and there you have
your supply zone right there and then
after you mark up your supply Zone you
also want to mark up your demand Zone
and I can see there's a buying
inefficiency right here so I will even
go down to to 1 hour time frame to make
our my demand Zone much more title so
over here there's actually a demand Zone
area right there and just to make the
supply Zone nicer I'll just mark it like
right here you can see this is the high
and the low of the candle right here and
over here we have our supply Zone and
over here we have our demand zone right
and right now we can see price
approached this major Supply Zone area
that we have right here and in addition
to that you can also draw out your
Fibonacci like I mentioned from the
point A to point B right here and you
can see that price has also retraced to
the 61.8 retracement level and just nice
the 61.8 retracement level actually
lined up with our supply Zone aut block
AAL right here this just gave us an
additional conference for us to enter
for a sell position right here but at
this point of time we are still
analyzing the charts marking up the
charts and we haven't looked for our
entry yet so next step is that we want
to go down to the 15minute time frame to
look for our entry so at this point of
time right there is still a lot of
buying momentum a lot of buying pressure
inside the market so I wouldn't enter
for this trade yet what I want to see is
a market shift a shift of momentum from
the buyers to the sellers
that is able to push the price down like
this so at this point of time I am very
patient and waiting so waiting like a
lion hunting is prey in the bush waiting
and at this point of time this is what I
was looking for a market shift that
shift from the buyers to the sellers so
at this point of time the sellers is
starting to take back control of the
price remember if price wanted to break
past this Supply Zone it would create
large bullish Candlestick like this and
just Pierce through this Supply Zone
with a lot of momentum and pushing the
price up but instead what price did was
that price stopped the momentum stopped
the buying momentum stopped so at this
point of time price has showed us that
sellers have entered into this market
and the buyers is losing control of the
market to the sellers so this is where I
personally entered for the trade for I
entered somewhere right around here
because it was like a very nice entry
and I was pretty confident on this trade
and I placed my stop loss Above This
Supply Zone and I place my take profit
all the way down at the next demand Zone
but wait there is a mistake being
committed right here remember what I
said earlier about how you need to use
multiple time frames to check your blind
spots so if you actually zoom out and
look towards the left you will notice
that there is actually another demand
Zone that is being formed right here
right because there's inefficiency right
here once again and this area here is
actually a demand Zone but wait what if
we zoom out even further if you zoom out
even further you will see that there is
actually another demand zone right here
right you can see there's another demand
zone right here where price mitigated
this AA multiple times so actually our
take profit shouldn't be down here it
should be all the way up here at this
recent demand Zone and ladies and
gentlemen this is where the fund begins
let it happen you can see price went
down immediately and actually hit our
take profit right here before it
actually started reversing and hit back
up now look
observe look at this large Candlestick
the reason why there was a lot of
liquidity at this area and I predicted
it is because remember this is a supply
Zone order block the smart money are
looking to load up the sell orders at
this AEL that is why price gave us this
huge move down and I caught it because I
use top down analysis like this video If
this video has help you guys out and we
have just launched our free trading
Community trading tribe where we are
committed to helping each other to
improve so that we can all Achieve
Financial Freedom together and become
profitable Traders together so if you
want to join that click the first link
in the description and if you want to
learn more about supply and demand you
definitely should check out this
strategy right here and as always
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